IIPELP: Nigeria Risks Bankruptcy on Account of Petrol Subsidy
PHOTO: Julius Atoi
in Abuja Harsh details of what may become of Nigeria’s economic situation if her government continues to subsidise importation of petroleum products under the Petroleum Support Fund (PSF) scheme were at the weekend revealed by the International Institute for Petroleum, Energy Law and Policy (IIPELP).
IIPELP, a think-tank that provides institutional and structural support to the energy sector in Africa and Nigeria warned that the country stands the risk of bankruptcy in a matter of months if it continues to regulate domestic price and consumption of petrol by her citizens.
Speaking on the backdrop of the country’s dysfunctional downstream petroleum sector, continuous dip in crude oil prices and revenue accruable to the country from therein, as well as the country’s diverse trials in her upstream crude oil operations, IIPELP’s President, Prof. Niyi Ayoola-Daniel told THISDAY in an exclusive interview that sustaining the subsidy scheme would be a tough call on the incoming government of Muhammadu Buhari. Ayoola-Daniel’s warning came at a time when a 2012 audit report of activities in Nigeria’s oil and gas sector conducted and published by the Nigeria Extractive Industries Transparency Initiative (NEITI) has recommended that the country’s four legacy refineries in Port Harcourt, Warri and Kaduna be privatised immediately to cut short her losses from them.
“When people queue at filling stations for two days to buy fuel, you have effectively taken out their sources of livelihood because those days are wasted. If subsidy continues, it can shut down Nigeria’s economy because we cannot continue to subsidise such consumption to the detriment of our economy,” Ayoola-Daniel said in response to a question on the status of Nigeria’s downstream petroleum sector. He further said: “This game of subsidy has been a political one and has not been played on the rings of economic data, neither is it factdriven. It is emotionally driven and politically played by those people that use it as a political tool and we cannot continue like this.”